Wyatt wouldn’t out of business, although he wouldn’t have anything like the market his oil once commanded. Oils are still needed as lubricants, and petroleum products are the basis of many thermoplastics. Dannager would also fill an important niche. Electrical heating elements won’t produce enough heat to smelt iron or make glass, particularly given the materials available when AS was written. You need hydrocarbons to make wire, light bulbs, and frying pans.
The trouble is that you don’t need that many of them if the market is restricted to a few who have the generator to utilize the electrical devices. This is the obvious self interest of everyone in Galt’s Gulch. They would be justified in subsidizing production of generators based on Galt’s design. It gives them something to trade and pacify the rest of the population, which keeps them from being killed out of revenge. It also creates a demand for other products they can produce. Think of printers and printer cartridges.
The next consideration is one that Rand probably didn’t consider. Even if you know how to build a factory that makes 10,000 light bulbs in an hour, it serves no purpose in this world. There’s no demand for that many light bulbs. The mass production facility would never return the investment. By the time there is a demand for it to supply, someone will have a new process that is more efficient, built on the design of the first factory.
So it makes sense to operate small manufacturing systems, similar to guilds. Hank Rearden’s light bulb factory might employ a couple of glass blowers and a couple of furnace operators, who prepare the materials and pack the finished products when they’re not making the bulbs. As such, it’s not a huge investment to compete with him. If you can find a better way, or outlast him in a price war, you win.
Here is one place where Judge Narragansett’s rule to prevent government interference in business truly fails: patent protection. If Hank Rearden could make Rearden Metal, someone else could get a sample of it, determine the alloys, and make the metal. What’s the point of inventing the metal if anyone can use his work without compensating him? In fact, it’s counterproductive to invest in new technology because once it’s there, someone else can make it and not have to recoup the investment on research and development. To develop a new product or process is to cut your own throat.
Such a world would see industrial espionage as an equal to invention. Wages are commensurate with ability and knowledge. If I know your process and I can sell it for a large, one time price, what’s to stop me? If you pay me a salary that makes removes that incentive, you’ve got to pay that salary to everyone else who understands the process. You can’t produce cheap goods.
. . .
A large part of society is built around the need for utlities. The need for water and waste disposal won’t go away, but the need for power would disappear if a generator built on Galt’s motor was available. But they still need water. A city can’t keep drilling wells to meet its needs. It will eventually take the water out of the aquifer. It requires a system of water collection and storage.
Given free electricity, it’s possible for small groups to make their own water. This can be done by purifying waste water and making whatever amount is needed. Ellis Wyatt’s oil fields again come into play. Water is oxygen and hydrogen. Oxygen is readily available, but not hydrogen. Oil is a hydrocarbon, therefore a source of hydrogen that is safe to transport and store. One could make a comfortable place for one’s self far outside the mainstream given such technology.
But that denies human behavior. People are social. We like the company of others, Community also provides distinct advantages over isolation. Medicine and regular food supplies are products of communities. Sharing specialized knowledge is fundamental. We don’t have to know how to wire a house. We hire people to do that, with the added advantage that their experience ensures that the wiring won’t set the house on fire.
Besides that, we are often lazy, and laziness has contributed more to technological progress than most people imagine. Just look at all those damn freepers who would rather sit around reading copies of The Annotated Guide To Atlas Shrugged by Publius and Billthedrill. They could be spinning yarn and knitting sweaters all night, but no . . .
People also want stuff. If they have a surplus to trade, they want comfortable clothing and furniture, made by others whose knowledge produces superior products. In order to have stuff, you need factories. Factories need employees, and that forces them to be close to population centers. The cities necessarily come back.
When the cities come back, so do the Karl Marxes. Marx was a lazy bum who found an audience for his ideas among envious members of the lower classes. They had a point - they were getting a raw deal from employers who knew they could be replaced due to mass production methods. But it was also before labor unions really took hold, and factories tended to be in large cities. When taxes and other costs made leaving the cities worthwhile, the value of labor increased. In order to survive in the higher cost area, you needed good workers to ensure efficiency. A bunch of schlubs might be cheap payroll, but they can’t compete with people who care about what they do.
When a company moves into a smaller labor pool, it has to increase wages to attract the best talent. This is a major problem with some of Rand’s industries in AS. Why is the greatest motor company in the world sitting in the middle of nowhere? It increases costs for materials received and costs of shipping finished products. It increases lead time and reduces the pool of available workers. From a economic perspective, it is a stupid place to put a large factory.
So the cities return, and with them the goods and services that make modern life. With them also returns the natural propensity of people to be jealous and to want things they didn’t earn. The question is, how do they keep the Marx brothers out of play?
Not sure I buy that one, at least totally. There's a lot of factories in the rural South and in the rural parts of the Great Lakes and Mid Atlantic states, so there is at least some level of manufacturing that you achieve in the absence of large cities. Perhaps it would be even more in the post-AS world with Galt's motor, as factories are sometimes located to be near very large electrical power sources, which might lead to clustering, and thence to urbanization.
In general though, excellent and thought provoking projections on your two posts.